Why SBA Lenders Require a Business Plan
Every SBA lender will ask for a business plan when you apply for acquisition financing. It’s not optional, it’s not a formality, and it’s not something you can throw together the night before submission.
Your SBA loan business plan serves several critical purposes in the underwriting process:
- It demonstrates your understanding of the business. Lenders want to see that you’ve done your homework. You need to show you understand the industry, the competitive landscape, and the specific business you’re acquiring.
- It proves you can operate the business. Buying a business is one thing — running it successfully is another. Your business plan should make it clear why you’re the right person to own and operate this company.
- It validates the financial projections. Lenders use your projections to assess whether the business can service the SBA debt. Your assumptions need to be realistic, well-supported, and conservative enough to be credible.
- It’s required by SBA guidelines. SBA Standard Operating Procedures require lenders to assess the borrower’s management ability and business plan as part of the credit analysis. No plan, no loan.
- It identifies risks and mitigation strategies. A good business plan doesn’t just paint a rosy picture — it acknowledges risks and explains how you’ll address them.
Think of your business plan as your job application to the lender. You’re asking them to invest $500,000 to $5,000,000 in your ability to run this business. The plan is your chance to prove you’re worth the bet.
What Sections to Include in Your SBA Loan Business Plan
A complete business plan for SBA acquisition financing should include the following sections. Skip any of these, and you risk delays or a declined application.
Executive Summary
This is the most important section of your business plan — and it should be written last. The executive summary gives the lender a quick overview of:
- What business you’re acquiring (name, location, industry)
- The purchase price and deal structure
- How much SBA financing you’re requesting
- Your background and why you’re qualified to run this business
- Key financial highlights (revenue, cash flow, projected DSCR)
- The opportunity — why this is a good investment
Keep it to 1-2 pages. Many underwriters read the executive summary first and decide within minutes whether to keep reading or move to the next file. Make it count.
Company Description
Provide a detailed overview of the business you’re acquiring:
- Business history: When was it founded? How has it evolved?
- Products and services: What does the business sell? What are the revenue streams?
- Location and facilities: Where does the business operate? What’s the lease situation?
- Employees: How many employees? Key personnel? Will they stay post-acquisition?
- Customers: Who are the primary customers? Any concentration risks?
- Competitive advantages: What makes this business defensible? Why do customers choose them over competitors?
- Current ownership and reason for sale: Why is the seller selling? This matters to lenders — retirement is a lot more comforting than “the business is struggling.”
Market Analysis
Demonstrate that you understand the market the business operates in:
- Industry overview: What’s the current state of the industry? Is it growing or contracting?
- Market size and trends: How large is the addressable market? What trends are shaping the industry?
- Competitive landscape: Who are the main competitors? How does the target business compare?
- Customer demographics: Who buys from this business and why?
- Barriers to entry: What prevents new competitors from entering the market?
- Regulatory environment: Are there licenses, permits, or regulations that affect the business?
Don’t just Google some industry statistics and paste them in. Lenders want to see that you have genuine insight into the specific market this business serves — its local competitive dynamics, customer behavior, and growth potential.
Management Team
This section is about you — the buyer — and anyone else who will be involved in running the business:
- Your background: Professional experience, education, and relevant skills. What in your background prepares you to own and operate this specific type of business?
- Industry experience: Have you worked in this industry before? If not, what transferable skills do you bring?
- Management experience: Have you managed teams, budgets, and operations? The lender needs to know you can lead.
- Key hires or existing management: Will you retain the current management team? Are there key employees who are critical to the business’s success?
- Transition plan: How will the transition from the current owner to you work? Will the seller stay on for a training period? How long?
- Advisory team: Do you have a CPA, attorney, and other advisors in place?
If you don’t have direct industry experience, this section is where you need to work hardest. Show the lender how your skills translate, and detail the support structure (retained employees, seller training, industry advisors) that will ensure a successful transition.
Financial Projections
This is the section that makes or breaks your application. Your financial projections need to show that the business can comfortably service the SBA debt while maintaining healthy operations:
- Historical financial summary: At least 3 years of the business’s historical revenue, expenses, and net income (or SDE/EBITDA).
- Projected income statement: Monthly projections for year one, annual for years two and three. Revenue, cost of goods sold, operating expenses, net income.
- Projected cash flow statement: This is what lenders care about most. Show monthly cash flow including debt service payments.
- Projected balance sheet: Opening balance sheet (post-acquisition) and projected year-end balance sheets.
- Debt service coverage ratio (DSCR): Most SBA lenders require a minimum DSCR of 1.25x. Your projections need to show this ratio is achievable — preferably with some cushion.
- Key assumptions: Clearly state the assumptions behind your projections. Revenue growth rate, margin assumptions, staffing plans, capital expenditure needs. Unsupported assumptions are the fastest way to get your plan questioned.
Critical rule: Be conservative. Lenders are skeptics by nature. If your projections show 30% revenue growth in year one with no supporting evidence, you’ll lose credibility. Project flat to modest growth (5-10%) and let the lender be pleasantly surprised if you outperform.
Use of Funds
Detail exactly how the SBA loan proceeds will be used:
- Business purchase price allocation (goodwill, equipment, inventory, real estate)
- Working capital needs
- Any planned capital expenditures or improvements
- Closing costs (legal fees, QoE report, appraisal, SBA guaranty fee)
The total should match your loan request. Every dollar should be accounted for.
Deal Structure Summary
Lay out the full deal structure so the lender can see the complete picture:
- Total purchase price
- SBA loan amount requested
- Buyer equity injection (source of funds)
- Seller financing (if any) — terms, interest rate, standby provisions
- Any other financing (conventional LOC, etc.)
Common Mistakes That Get Business Plans Rejected
We’ve reviewed hundreds of SBA business plans. These are the mistakes we see most often — and the ones that cause the most problems:
Overly Optimistic Projections
Projecting 25% revenue growth with no clear strategy for achieving it is the number one plan killer. Lenders see right through it. Base your projections on historical performance and clearly articulated growth strategies — not wishful thinking.
Ignoring the DSCR
If your projections don’t clearly demonstrate a DSCR of 1.25x or better, the lender will decline. Work backward from the debt service requirement to make sure your numbers work before submitting.
Vague Management Qualifications
Writing “I have 15 years of management experience” isn’t enough. The lender wants specifics. What did you manage? How big was the operation? What results did you achieve? Connect your experience directly to the requirements of running this specific business.
No Transition Plan
Lenders worry about what happens when the current owner walks away. If your plan doesn’t address the transition — seller training period, retention of key employees, customer communication strategy — the lender will worry too.
Copy-Paste Templates
Using a generic business plan template from the internet and filling in the blanks produces a generic, unconvincing plan. Lenders have seen thousands of these. They know a cookie-cutter plan when they see one, and it signals that you haven’t put in the work to truly understand the business.
Missing Financial Detail
Submitting projections without supporting assumptions, or providing only annual numbers without monthly detail for year one, signals a lack of financial sophistication. Lenders need to see that you understand the business’s financial dynamics at a granular level.
Inconsistencies
If your executive summary says revenue is $2M but your financial projections show $1.8M, the lender notices. If your market analysis discusses growth trends but your projections are flat, they’ll question your logic. Every section needs to tell a consistent story.
Templates vs. Custom Business Plans
Should you use a template or write a custom plan? Here’s the honest answer:
Templates are fine as a starting framework — they help you organize your thinking and make sure you don’t miss important sections. The SBA even provides resources through its SCORE mentoring program and Small Business Development Centers (SBDCs).
But the content must be custom. Every business is unique, and your plan needs to reflect the specific business you’re acquiring, your specific qualifications, and your specific strategy. A lender can tell in seconds whether a plan was thoughtfully written for this deal or mass-produced from a template.
The best business plans we see combine the structure of a proven framework with deeply customized content that demonstrates genuine understanding of the business and market.
How Long Should an SBA Business Plan Be?
For acquisition financing, a complete business plan typically runs 15-30 pages (excluding financial projection appendices). Here’s a rough breakdown:
- Executive Summary: 1-2 pages
- Company Description: 3-5 pages
- Market Analysis: 3-5 pages
- Management Team: 2-3 pages
- Financial Projections (narrative): 2-3 pages
- Use of Funds / Deal Structure: 1-2 pages
- Appendix (detailed financial projections, resumes, supporting docs): 10-20 pages
Longer isn’t better. A concise, well-organized 20-page plan beats a rambling 50-page plan every time. Underwriters are busy — respect their time while providing the detail they need to approve your loan.
Let GoSBA Write Your Business Plan — For Free
Here’s the part most borrowers don’t expect: GoSBA Loans includes a FREE professional business plan and financial projections with every acquisition deal.
This isn’t a basic template or a fill-in-the-blank worksheet. It’s a fully custom business plan and financial projection package that would cost you $2,500-$5,000 if you hired a consultant to create it independently.
Our business plans are:
- Lender-ready: Formatted and structured exactly how SBA underwriters want to see them
- Custom to your deal: Written specifically for your acquisition, your background, and your target business
- Financially rigorous: Projections built from the business’s historical financials with realistic, defensible assumptions
- Proven: We’ve produced hundreds of business plans that have been approved by top SBA lenders nationwide
Why do we include this for free? Because a strong business plan is the foundation of a successful SBA loan application. By providing professional-quality plans, we increase approval rates and close more deals — which benefits everyone.
Ready to Get Your SBA Loan Approved?
At GoSBA Loans, we’ve helped entrepreneurs secure over $320 million in SBA financing in 2025 through our network of 50+ SBA lenders. Our service is 100% free — you pay nothing, ever.
Every deal includes:
- FREE professional business plan ($2,500-$5,000 value)
- FREE financial projections customized to your acquisition
- Matching with the best SBA lender for your specific deal
- Expert guidance through every step of the process
Don’t spend weeks struggling with a business plan or thousands of dollars hiring a consultant. Let our team handle it while you focus on closing your deal.
Contact GoSBA Loans today to get your free business plan and connect with the right SBA lender. Your acquisition starts here.
